Hematological malignancies account for ~10% of new cancer diagnoses in the US, and many require transplantation of multipotent hematopoietic stem cells (HSC) derived from allogeneic donors. Although HSC transplantation can greatly improve patient survival, the availability of matched donors is limited, and the procedure can result in life- threatening graft-vs-host disease. Ideally, patients would be transplanted with corrected autologous HSC. The recent discoveries of induced pluripotent stem (iPS) cells, and technology enabling their efficient genetic modification, transform this idea into a realistic therapeutic goal. However, one critical, and currently limiting, step toward this goal is the efficient derivation of HSC with long-term engraftment potential from patient- specific iPS cells. We have learned from murine studies that HSC are generated from specialized hemogenic endothelial cells. Studies of human embryos suggest that hemogenic endothelial cell specification is critical for human hematopoiesis, as well. Thus, understanding the molecular events that specify hemogenic endothelium is critically important for promoting the generation of HSC; its recapitulation in human stem cell systems may generate a source of HSC for clinical therapies. To begin to dissect the molecular regulation of this process, we defined the phenotype of hemogenic endothelial cells in major sites of embryonic blood production - yolk sac and aorta-gonad- mesonephros (AGM). We determined that retinoic acid (RA) signaling is essential for their development; RA deficient mutants exhibit endothelial hyper-proliferation, and do not develop hemogenic endothelium or generate HSC. We found that Notch signaling functions downstream of RA to regulate endothelial cell cycle progression and hemogenic specification in the yolk sac. With these results as a foundation, the current proposal aims to advance our knowledge of the field. Specifically, we will further elucidate the role of Notch signaling in hemogenic endothelial cell specification and define the signaling components involved in this process (Aim 1); determine the role of endothelial cell cycle control in hemogenic specification (Aim 2); and apply insights from our murine developmental studies to the formation of hemogenic endothelial cells, and HSC production, from human iPS-derived primordial endothelium (Aim 3).